Declining loonie to reduce Canadian travel to U.S.: TD Bank
A U.S. Customs and Border Protection officer looks toward a car coming toward him in this 2009 file photo. (AP / Elaine Thompson)
Sonja Puzic, CTVNews.ca
Published Monday, February 24, 2014 2:34PM EST
Canadians are expected to make 3 million fewer trips across the border this year and next because of the weak loonie, according to a new report from the Toronto-Dominion Bank.
The drop in the Canadian dollar will mostly affect short-term visits to the U.S., and reduce Canadian spending in the country by an estimated $4.5 billion.
However, Canadian snowbirds’ yearly trips to the southern states will not be affected, TD says.
About 80 per cent of Canadian visits to the U.S. are overnight or same-day trips, which often involve shopping and entertainment close to the border. Each year, about 23.5 million Canadians cross the border, contributing $22.3 billion to the U.S. economy, according to TD.
The bank predicts border towns with popular shopping destinations in New York and Washington states, among others, will be hardest hit by the decline in Canadian visitors.
Canadian retailers close to the border, on the other hand, will likely reap some benefits, because shoppers tend to stay close to home when the Canadian dollar is weak, TD says. There is also a greater chance that American travellers will want to stretch their dollar further in Canada.
However, the higher price of many goods in Canada, blamed on import costs, will probably cut into any sale increases, the TD report notes.
Even though the loonie is now hovering at 90 cents U.S., the estimated 500,000 or more Canadians who spend three to six months in southern U.S. every year are unlikely to change their winter plans, according to TD.
“The growing flock of snowbirds is based more on an aging population and on lifestyle choice, which will insulate this activity against swings in the Canadian dollar,” the report says.
Many snowbirds also own property in Florida and other southern states, and that’s what keeps them coming back year after year. But if the loonie remains weak, more people may turn to renting their winter getaways, TD says.